Meeting Panel Updates April 2012

Panel Meeting 196 12 April 2012

Apologies Andrew Pinder 12 April 2012

Report on Progress of Modification Proposals Adam Lattimore 12 April 2012

Modifications Overview New P282, P283 Assessment P272, P274, P276, P280, P281 Report P275, P277, P278 With Authority - Authority Determined - 3

Modifications Overview Panel Ofgem Decision Decision By Decision By Fall Back Impl. date Mod. Title IWA Assessment Report Recommend ation Impl. Date Mandatory Half Hourly Settlement for Profile Classes 5-8 Cessation of Compensatory Adjustments Extending BSC Performance Assurance Introduce an additional trigger for suspending the market in the event of a Partial Shutdown Allow Interconnector BM Units to choose their P/C Status Treatment of Transmission Losses for Interconnector Users Introduction of new Measurement Classes P272 09-Jun-11 13-Sep-12 11-Oct-12 14-Feb-13 06-April-14 13-Feb-14 06-Apr-15 P274 13-Oct-11 12-Jul-12 09-Aug-12 P275 13-Oct-11 08-Mar-12 12-Apr-12 Approve - 10 WDs - - 28-Feb-13 27-Jun-13 P276 13-Oct-11 04-May-12 14-Jun-12 P277 13-Oct-11 08-Mar-12 12-Apr-12 Reject 28-May-12 28-Feb-13 27-Sep-12 27-Jun-13 P278 13-Oct-11 08-Mar-12 12-Apr-12 Approve 01-May-12 01-Nov-12 28-Aug-12 28-Feb-13 P280 08-Dec-11 14-Jun-12 12-July-12 Change of BSCCo Board of Directors & Chairman P281 12-Jan-12 04-May-12 14-Jun-12 4

196/04 November Release Date Colin Berry 12 April 2012

Introduction BSC Release dates: Last Thursday in February Last Thursday in June First Thursday in November November 12 Release date would be 1 November 2012 Seeking to change Release date to allow technology upgrade 6

Technology Upgrade BSC Systems Technology upgrade: Initially developed and tested in 2011 Significant Oracle defects found delayed implementation Oracle has fixed defects now Cannot restart technology upgrade before June 12 Release work completes Technology upgrade complete in September 2012 Required to ensure BSC Systems fully supported 7

November 12 Release Scope of Release: No Approved Modifications to date No approved Change Proposals to date P278 targeted at Release Four Change Requests P278 Impacts SAA software Requires 10 week project Earliest implementation date 29 November November 12 Release date propose change to 29 November 8

November Release: Recommendations The BSC Panel is invited to: NOTE the rationale to change the November 12 Release implementation date AGREE that the November 12 Release implementation date be changed to 29 November 2012 9

196/05 P275: Extending Performance Assurance Melinda Anderson 12 April 2012

P275: Issue and solution Issue: P275 argues that the Code implies the PAB acts only for Trading Parties This would mean that PAB would not resolve issues for BSC Parties that are not Trading Parties (e.g. LDSOs) even though they rely on Settlement data and processes for a number of business purposes This is not the case Solution: P275 solution is to add a paragraph to Section Z to clarify the relationship between the PAB and all PAPs with respect to Z1.6.1 Code-only change; scope of Performance Assurance unaffected 11

P275: Panels initial views No impact on Applicable Objectives (a), (b), (c) and (e) The Panel unanimously agreed with the Workgroup s majority view that P275 would better facilitate Objective (d) because increased BSC clarity promotes efficiency in the BSC arrangements Unanimously agreed legal text Unanimously agreed Self Governance Unanimously supported implementation dates 16WD if Self Governance or 10WD following Authority decision 12

P275: Report Phase Responses No new arguments were presented Majority support for Panel s initial recommendation Unanimous support for Implementation Date Unanimous support for Self Governance One comment on legal drafting It does not deliver the original intent of Modification but delivers the eventual intention Agree? Yes No Approve P275 Implementation Date 5 6 1 0 13

P275: Recommendations (1 of 2) The BSC Panel is invited: NOTE Draft Modification Report CONFIRM views on Applicable BSC Objectives CONFIRM that P275 meets Self-Governance Criteria APPROVE P275 14

P275: Recommendations (2 of 2) APPROVE Implementation Date: 16 WD after approval or 10WD after Authority decision APPROVE BSC legal text APPROVE Self-Governance Modification Report NOTE appeal window closes 15WD after ELEXON s notification of the Panel s decision (3 May 2012) 15

196/06 P277: Allow Interconnector BM Units to choose their P/C Status David Kemp 12 April 2012

P277: Issue Energy entering GB over Interconnector assigned to different Account to energy leaving GB Moyle Applicable to both transit flows and flows starting/ending in GB 100MW out of GB Allocated to C Account Charged SBP Without ECVN, in net imbalance even though net volume is zero IFA 100MW into GB Allocated to P Account Paid SSP 17

P277: Solution Single BM Unit per Interconnector per User Lead Party can elect P/C Status of these BM Units Allows Party to net import over one Interconnector and export over another Volumes would not net to zero, due to transmission losses Solution would be mandatory 18

P277: Panels initial views on: Applicable Objectives Relevant Objectives are (c) and (d) no impact on (a), (b) and (e) Majority does not better facilitate (c) and (d): Unduly discriminatory (c) Current arrangements not barrier to entry (c) Wouldn t improve efficiency (d) Minority does better facilitate (c) and (d): Interconnectors already treated differently (c) Precedent for different treatment (c) 19

P277: Panels initial views on: legal drafting Legal text consulted on during Assessment One minor comment made amendment made accordingly Drafting for BSCPs 15, 31 & 65 and CRA SD prepared during Assessment Not consulted on during Assessment Panel unanimously agreed drafting for Report consultation 20

P277: Panels initial views on: Implementation Date Unanimous Panel support for proposed Implementation Dates: February 2013 Release Fall-back June 2013 Release Driven by East-West Interconnector 21

P277: Report Phase Responses Agree? Reject P277 Implementation Date Changes to Code and CSDs Yes 6 8 6 No 2 0 0 No new respondents No new arguments raised Majority support for Panel s initial recommendation Unanimous support for Implementation Date No comments on legal drafting 22

P277: Recommendations (1 of 2) The BSC Panel is invited to: NOTE the P277 Draft Modification Report and the Report Phase Consultation responses; CONFIRM the recommendation to the Authority contained in the P277 draft Modification Report that P277 should not be made; 23

P277: Recommendations (2 of 2) APPROVE an Implementation Date for P277 of: 28 February 2013 if an Authority decision is received on or before 28 May 2012; or 27 June 2013 if an Authority decision is received after 28 May 2012 but on or before 27 September 2012; APPROVE the BSC legal text for P277; APPROVE the changes to BSCP15, BSCP31, BSCP65 and the CRA Service Description for P277; and APPROVE the P277 Modification Report. 24

196/07 P278: Treatment of Transmission Losses for Interconnector Users David Kemp 12 April 2012

P278: Issue BSC allocates transmission losses to Interconnector BM Units Anomalous in light of ITC scheme Compensates TSOs for National losses caused by cross-border flows National Grid passes through compensation to generators and Suppliers through TNUoS Compensation can be positive or negative Interconnectors should not be subject to additional network charges GB arrangements need to comply with European legislation 26

P278: Solution Set TLM to 1 for Interconnector BM Units BSC to no longer adjust Interconnector BM Unit Metered Volumes for any GB transmission losses BSC would still allocate total GB transmission losses proportionally across all other types of BM Unit Interconnector BM Units account for 2% of losses Low materiality volatility of losses can exceed this amount 27

P278: Panels initial views on: Applicable Objectives Relevant Objectives are (a), (c) and (e) no impact on (b) and (d) Majority better facilitates (a), (c) and (e): P278 most proportionate solution to demonstrate compliance Minority does not better facilitate (a), (c), and (e): Undue discrimination (c) May not be needed 28

P278: Panels initial views on: legal drafting Legal text consulted on during Assessment No comments received Panel unanimously agreed drafting for Report consultation 29

P278: Panels initial views on: Implementation Date Unanimous Panel support for proposed Implementation Dates: November 2012 Release Fall-back February 2013 Release Driven by lead time for changes to central systems 30

P278: Report Phase Responses Agree? Approve P278 Implementation Date Changes to Code Yes 6 7 6 No 0 0 0 No new respondents No new arguments raised Majority support for Panel s initial recommendation One respondent was unsure Unanimous support for Implementation Date No comments on legal drafting 31

P278: Recommendations (1 of 2) The BSC Panel is invited to: NOTE the P278 Draft Modification Report and the Report Phase Consultation responses; CONFIRM the recommendation to the Authority contained in the P278 draft Modification Report that P278 should be made; 32

P278: Recommendations (2 of 2) APPROVE an Implementation Date for P278 of: November 2012 if an Authority decision is received on or before 1 May 2012; or 28 February 2013 if an Authority decision is received after 1 May 2012 but on or before 28 August 2012; APPROVE the BSC legal text for P278; and APPROVE the P278 Modification Report. 33

196/08 P282: Allow MVRNs from Production to Consumption or Vice Versa David Kemp 12 April 2012

P282 Allow MVRNs from Production to Consumption or Vice Versa Nigel Cornwall For Statkraft

Metered Volume Reallocation Notifications Dual trading accounts are key feature of Neta market template designed to ensure larger, vertically integrated players could not enjoy netting benefit MVRNs have from outset provided valuable flexibility for licensed parties to consolidate generation or consumption volumes horizontally in effect avoid active day-to-day participation in central trading arrangements An unnecessary restriction exists, which P282 seeks to remove this prevents energy from Production BM Units being transferred to Consumption Energy Accounts and vice versa 36

MVRN restriction % volume or MWh Lead Party BM Unit Subsidiary party Energy Account Trading charges Consumption Consumption Production Production 37

Defects The current restriction: is ineffective in its original assumed aim competitive restrictions should be matter for regulation e.g. mandatory auctions inappropriately restricts participants ability in managing imbalance risk denies organic commercial choices imposes cost unnecessarily complicates the trading arrangements creates an inequity with embedded generation can consolidate against demand also sits uncomfortably with trading unit concept treats trading parties differently from system operator may not be in line with European practice 38

Key benefits of P282 Additional flexibility to manage imbalance risk, particularly for smaller participants to consolidate positions increases efficiency reveals true imbalance competitive benefits benefits relative to off-take market Levels playing field with embedded generation P100 de facto acknowledged desire to stimulate competition and permit consolidation Reduces complexity of trading arrangements and costs of compliance especially with regard to contract notification process credit? 39

Against BSC relevant objectives c) (facilitating competition) - significantly, through additional flexibility to manage imbalance exposure to own circumstances and strategies. Risk reduction increases competition and encourages new entrants d) (efficiency in arrangements) removing an unnecessary restriction and helping trading parties manage their own costs e) (European compliance) - may harmonise arrangements with those in Europe (P277 workgroup) 40

Issues Working group invited to consider: if restriction should remain for participants over a certain size e.g. 20TWh annual production or consumption single energy account alternative? allow flag switching? Targetted and proportionate relative to alternatives 41

P282: Modification Proposal Allow MVRNs from Production BM Units to Consumption Energy Account or vice versa Would also allow a Party to MVRN energy from their Production BM Units to their own Consumption Energy Account or vice versa 42

P282: Things to consider What changes are needed to support the proposed solution? What wider impacts would the proposed solution have? How would GB s two-Account arrangements be affected? What benefits would Parties gain from P282? What meaning would Production and Consumption hold? What are the benefits to the Applicable BSC Objectives? 43

P282: Proposed progression (1 of 2) Recommend: 6-month Assessment Procedure (11 October 2012) Workgroup membership should include: Members of Settlement Standing Modification Group (SSMG) Any other relevant experts and interested Parties 6 months needed to allow: Full assessment of wider impacts, including detailed analysis Full consideration of wider implications 20WD Industry IA and 15WD consultation Avoiding Workgroup meetings during London 2012 Olympics 44

P282: Proposed progression (2 of 2) Proposer believes no link with any current SCRs Possible interactions with Cash-Out SCR Proposer is not requesting Self-Governance Material impact on existing arrangements 45

P282: Recommendations (1 of 2) The BSC Panel is invited to: DETERMINE that Modification Proposal P282 progresses to the Assessment Procedure; AGREE the Assessment Procedure timetable such that an Assessment Report should be completed and submitted to the Panel at its meeting on 11 October 2012; 46

P282: Recommendations (2 of 2) DETERMINE that the P282 Workgroup should be formed from members of the Settlement Standing Modification Group (SSMG), supplemented with any other relevant experts and interested Parties; AGREEthe Workgroup s Terms of Reference; AGREE that P282 has no interaction with any on-going SCRs; and AGREE that P282 does not meet the Self-Governance Criteria. 47

196/09 Recommendation to raise a Modification Proposal: Reinforcing the Commission of Metering Equipment Process Dean Riddell 12 April 2012

Background Metering Equipment subject to commissioning process (CoP4) Metering System Registrant responsible Typically discharged via appointed Meter Operator Agent (MOA) Intended to prove accuracy of metering and detect problems Failure may mask significant issues (unlikely to be detected later) Technical Assurance of Metering Expert Group (TAMEG) and ELEXON concerns Certain Metering Equipment usually not within Registrant/MOA control when commissioning required Issues prevent proper commissioning and lead to incomplete records 49